Message Boards Digest

May 1, 2018

Here are the most recently added topics on the BenefitsLink Message Boards:

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Cynchbeast created a topic in Retirement Plans in General

1099-R When 'Rollover' Check Made Payable to Surviving Spouse, Not Surviving Spouse's IRA Custodian

A participant died. His wife wanted to roll over his money into her IRA. We provided a directive instructing the plan to make check to BofA, fbo the wife. We would report that on the 1099-R as a rollover, non-taxable event. When we got a copy of the check as evidence of the distribution, it was payable to the wife. This makes it a fully taxable event (about $14k with nothing withheld). Assuming she puts the money into her BofA IRA within 60 days, how do we report this on the 1099-R? Do we report it as taxable or as a rollover?
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ldr created a topic in 401(k) Plans

Form 5500 Plan Characteristic Code 2T

Who would like to settle a tiny difference of opinion in our office? One of us thinks that Plan Characteristic Code 2T would apply to ALL such plans (with participant directed accounts) as those maintained by John Hancock, American Funds, Mass Mutual, Lincoln etc. because there is a mechanism of some sort in dealing with money belonging to participants who never made a fund election. It won't just sit in cash. Typically it goes to a Target Date Fund based on the participants' birthdays but it could be something else. So wouldn't all such plans automatically check 2T on the 5500? Another person in our office thinks that 2T only applies if there actually are participants who have defaulted into the automatic investment. He thinks that merely having the provision is not enough; there must actually be such people in the plan.
Number of replies posted  6 replies      Number of times viewed  70 views      Add Reply
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Dazednconfused created a topic in 401(k) Plans

Using Carve-Outs to Satisfy ADP When Eligibility Periods Differ

Plan has 3 months of service for 401k (entry month following) and 1 YOS for safe harbor 3% and Profit Sharing. There are 3 NHCEs and 1 HCE that enter the plan in 2017 for deferrals only, HCE deferred the max, 3 NHCEs are at zero, so OEE ADP test fails. Can the HCE be tested with the non-excludable group and the NHCEs be carved out and thus pass ADP? In reading regs (and other posts) this can be done but I am not sure if it applies with different eligibility periods for safe harbor and deferrals.
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KimberlyC created a topic in Health Plans (Including ACA, COBRA, HIPAA)

Mental Health Parity Issue? Unequal Rules for Rollover to Next Year's Deductible Amount

Under the Mental Health Parity and Addiction Act of 2008, a group health plan (or insurer) generally cannot impose a financial requirement (e.g., copayment, deductible, or coinsurance) or a quantitative treatment limitation (e.g., number of inpatient days covered) on mental health or substance abuse benefits that is more restrictive than the requirements or limitations that apply to at least 2/3 of medical/surgical benefits in the same classification (e.g., in-patient, emergency care, prescription drugs). Under these rules, mental health and substance abuse benefits should be subject to the same deductible as comparable medical/surgical benefits. I recently have seen health plans drafted by insurance companies (whether it is an insured or self-insured plan) that provide the same deductibles for mental health and substance abuse benefits as for medical/surgical benefits, but treat the deductibles differently for purposes of rollover. For example, the plan provides that costs incurred in the last two months of the plan year for medical/surgical benefits may be applied toward the deductible in the following plan year, but costs incurred for mental health and substance abuse benefits in the last two months of a plan year will NOT be applied to the deductible in the following plan year. This appears to be illegal to me -- certainly it seems to violate spirit of the Act and guidance issued to date, but I haven't seen anything (such as a FAQ) directly on point.
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figure 8 created a topic in Defined Benefit Plans, Including Cash Balance

$15,000 PBGC Premium for 99% Funded Plan with Only 30 Participants: Any Solution?

Client (small medical company) has had a CB plan for several years and just became large enough to trigger coverage in the middle of 2017. 2018 is first full year of coverage. The plan has more than 25 employees at 1-1-18, so the small plan cap is not usable. The plan has a few doctors with large benefits who are 10-15 years from retirement. CB rate is 5%, but PBGC rate for them is about 4%, leading to inflated PBGC funding targets (i.e., PBGC FT is significantly higher than the actual CB benefits). The alternative rate is even lower, so that doesn't help. Plan is end of year val, so assets are as of 12-31-17. Can't do anything to make that asset value higher, though a large contribution could be made for the 2017 plan year to increase 12-31-18 assets and decrease next year's premium. This seems like a perfect storm, as the premium is coming out to be over $15,000! And this is for a group with about 30 participants that is 99% funded on a lump sum basis! This seems absolutely ridiculous, and I'm just wondering if I'm missing something as a potential solution.
Number of replies posted  3 replies      Number of times viewed  36 views      Add Reply, Inc.
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